In his book – Principles: Life and Work, Ray Dalio emphasizes the importance of confronting and accepting uncertainty to make better decisions. He advocates for the value of seeking diverse perspectives and staying humble about what you know, as knowledge gaps can lead to critical insights.
Dalio encourages logical decision-making through expected value calculations, managing risks, and avoiding overconfidence by triangulating opinions with credible sources. He advises making a series of small, uncorrelated bets to minimize potential losses while maximizing opportunities. Success, he argues, lies as much in asking the right questions as in finding the right answers.
Here’s an excerpt from the book:
190) Recognize the Power of Knowing How to Deal with Not Knowing
191) Recognize that your goal is to come up with the best answer, that the probability of your having it is small, and that even if you have it, you can’t be confident that you do have it unless you have other believable people test you.
192) Understand that the ability to deal with not knowing is far more powerful than knowing
a) Embrace the power of asking: “What don’t I know, and what should I do about it?”
b)Finding the path to success is at least as dependent on coming up with the right questions as coming up with answers.
193) Remember that your goal is to find the best answer, not to give the best one you have.
194) While everyone has the right to have questions and theories, only believable people have the right to have opinions
195) Constantly worry about what you are missing.
a) Successful people ask for the criticism of others and consider its merit.
b) Triangulate your view.
196) Make All Decisions Logically, as Expected Value Calculations
197) Considering both the probabilities and the payoffs of the consequences, make sure that the probability of the unacceptable (i.e., the risk of ruin) is nil.
a) The cost of a bad decision is equal to or greater than the reward of a good decision, so knowing what you don’t know is at least as valuable as knowing.
b) Recognize opportunities where there isn’t much to lose and a lot to gain, even if the probability of the gain happening is low.
c) Understand how valuable it is to raise the probability that your decision will be right by accurately assessing the probability of your being right.
d) Don’t bet too much on anything. Make 15 or more good, uncorrelated bets.
You can find a copy of the book here:
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